12:15 pm
VIX has stretched its Master Cycle to 273 days, an unusually long stretch. However, there is some light at the end of the tunnel, as Wave (c) reaches equality with (a) at 18.51. The stretch may be over, or nearly so. Prepare for the panic blow-back on the next move, as a slingshot move may be in play.
ZeroHedge suggests, “Don’t buy protection when you must…
…buy it when you can. The VIX guy managed nailing it again. Since his latest call on March 9 (here), VIX has collapsed. VIX needs to double from here in order to reach the most recent highs. When was the last time you bought something and it doubled? Now is the time when you can buy it…”
11:55 am
GKX bounced from the Intermediate-term support at 530.53 this morning on day 263 of the Master Cycle. It is likely to have one more probe deeper, possibly as low as the 50-day Moving Average at 507.12. Wave C of (2) achieves equality with Wave A at 515.00. The March 8 peak at 592.02 exceeded the March 2011 high at 570.50 giving GKX a breakout status with a potential of reaching 900.00 or higher by the end of the year.
ZeroHedge explains, “t was a spooky time to be out at sea off the US East Coast on Halloween in 1991. A strong storm system over the maritime provinces in Canada merged with the remnants of Hurricane Grace, forming a new, epic, and dangerous Nor’easter. The winds of this new storm breached 70 miles per hour and a wave as high as 100 feet was measured off the coast of Nova Scotia, but the storm was not renamed as either a tropical storm or a hurricane – instead, it is known only colloquially as simply the Perfect Storm. Six fishermen from Massachusetts perished when their vessel Andrea Gail sunk in open waters, and the story of the storm and of that tragedy became the subject of a best-selling book and a blockbuster feature film.
While the concept of a perfect storm is often too casually assigned in popular culture, it is difficult to find a more apt description of what has been unfolding in the global agriculture markets over these past several months. The tempest caused by the European energy disaster has merged with the hurricane of consequences flowing from Russia’s invasion of Ukraine, forming the genesis of a generational crisis in food that will leave few unaffected. While we’ve been warning about just such a scenario for some time, after spending the past two weeks traveling across the US Midwest and conferring with our contacts in the agricultural sector, even we are a little spooked by what we’ve learned. In a financial crash, the correlation between all asset classes converges to one. The coming crash in global food supply will be driven by a similar phenomenon across virtually every input into farming – they are all spiking to historic highs simultaneously, supply availability is diminishing across the spectrum, and the time to reverse the worst of the upcoming consequences is rapidly running short.
Other than that, things are great.”
8:30 am
Good Morning!
SPX futures have risen to an overnight high of 4617.60, where Wave C is 1.5 times the size of Wave A. The point to be made here is the NYSE Hi-Lo Index closed at -64.00 yesterday, suggesting the only players may be the dealers and overseas buyers and not the retail clients who are still reluctant to go long, but may be more interested in selling the high and exiting the market as best they can.
ZeroHedge reports, “Following yesterday’s surge in stocks following an FT report that Russia has eased on its Ukraine demands and the Russian ceasefire document no longer contains any discussion of three of Russia’s initial core demands – “denazification”, “demilitarisation”, and legal protection for the Russian language in Ukraine – overnight futures have extended their “feel good” rise as peace negotiations which resumed on Tuesday in Turkey between Russia and Ukraine stoked a rally in global equities, and hit session highs after Ukrainian negotiator Podoliak noted that a ceasefire is being discussed with Russia adding a press conference is to be expected later. Ukraine is striving for a cease-fire agreement in talks with Russian negotiators that started Tuesday in Turkey, setting a “minimum” goal of an improvement in the humanitarian situation. Nasdaq 100 futures were up 0.6% while S&P 500 futures gained 0.5% and Dow futures 0.4%. Europe’s Stoxx 600 Index also advanced, with auto and consumer stocks outperforming. Oil fluctuated as investors weighed the impact of China’s mobility curbs against a Covid resurgence on demand; the dollar dropped. Treasuries bear flattened, outperforming bunds and gilts as haven demand continues to be unwound; the 10Y TSY yield rose to 2.50%.”
VIX futures may be consolidating beneath the mid-Cycle resistance at 21.02 after a 272- day Master Cycle. This leaves an entire month of potential rally as the next Cycle Pivot is at the end of April.
CharlesHughSmith instructs, “Stocks don’t vanish when sold; somebody owns the shares all the way to the bottom. These owners who refuse to sell because they have convinced themselves the next dip will be the hoped-for resumption of the bullish trend are called “bagholders.”
Trends are tricky. Humans anticipate the present conditions will continue on into the future. In economics and finance, we call this continuation a “trend.” Trends continue until something fundamental changes and the trend takes a new course.”
TNX has pulled back to 24.37 this morning as it consolidates after a dizzying rally. It may pull back to the Cycle Top support at 21.74 in the next two weeks but, soon afterward, may break above the trading channel of the last 4-6 months.
ZeroHedge reports, “With interest rates marching relentlessly higher both in the US and across the world, even as much of the yield curve pancakes and inverts to pre-recession if not pre-depression levels…
… because the last time the 2s30s 1Y fwd was here, the dot come bubble burst…
… Wall Street has once again shifted its tune for obvious reasons, and while no longer predicting the yield curve can’t invert – pretty much everyone now acknowledges it’s just a matter of time, with Goldman predicting 2s10s goes negative next quarter..
USD futures have declined beneath the Cycle Top support at 98.78 to a morning low of 998.13. This was done without exceeding the prior high at 99.43 to complete the final impulse. Today is day 265 in the current Master Cycle, so time is running out for a new high. I am reluctant to make a call on a reversal yet, although yesterday’s high at 99.36 may have been the end of a truncated impulse.
Crude oil futures have declined this morning to a low of 98.56, violating three supports in the process. It is on a confirmed sell signal with about 4 weeks of decline ahead of it, according to the Cycles Model.
ZeroHedge reports, “A recently published analysis by a consumer advocacy nonprofit maintains that shutting a 4.5-mile section of a nearly 70-year-old pipeline that spans the Great Lakes from Wisconsin to Ontario would impose $23.7 billion in higher fuel costs on families and businesses in Indiana, Michigan, Ohio, and Pennsylvania.
Consumer Energy Alliance’s (CEA) 14-page report estimates that closing Canada-based Enbridge’s Line 5 pipeline in the Straits of Mackinac, which connect Lake Michigan to Lake Huron, would spur regional fuel price spikes of 9.47 to 11.66 percent “independent of any other market conditions, such as the surge in fuel prices observed over the past 12 months that are tied to international oil markets and logistical challenges caused by the pandemic.”
Gold futures smacked down to a morning low of 1888.40, just above the 50-day Moving Average at 1886.85. It is on a sell signal and may decline to the week of April 25, says the Cycles Model. It may decline as far at the mid-Cycle support at 1820.57. There are still many writers who insist that gold is “real money.” However, the fact that gold can be confiscated and is unable to travel across borders is limiting the value of gold as a currency.